VietNamNet Bridge - Analysts believe the petroleum distribution market will see a breakthrough after the conclusion of IPOs for PV Oil and Binh Son Refinery (BSR).



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The petroleum distribution market will see a breakthrough





BSR plans an IPO at HOSE (HCMC Stock Exchange) on January 17, putting an 8 percent stake on sale. After that it will sell a 49 percent stake to strategic investors. The State will hold no more than a 43 percent stake in BSR.

PV Oil has also prepared for its IPO, though the exact date has not been announced. It will offer a 44.7 percent stake to strategic shareholders and allow foreign investors to buy up to a 49 percent stake as per current law.

The two giants in the oil & gas industry – BSR (VND31 trillion in charter capital) and PV Oil (VND10.342 trillion) — are holding IPOs within a short time and offering to sell a high proportion of their business. This shows that the state no longer wants to hold the controlling stake in petroleum manufacturers and traders. 

However, under WTO commitments, Vietnam doesn’t have to open the petroleum market as import/export and distribution are not reserved for foreign companies.

To become strategic investors of PV Oil, investors must satisfy one requirement. The decision signed by Deputy PM Vuong Dinh Hue says that strategic investors have to commit to allow PV Oil to continue to buy products from Nghi Son and Binh Son Refineries for at least 10 years after equitization at market prices.

Strategic investors have to commit to allow PV Oil to continue to buy products from Nghi Son and Binh Son Refineries for at least 10 years after equitization at market prices.
As for BSR, its prospectus shows that PV Oil is the only crude oil supplier to BSR. This means that PV Oil is in charge of providing 100 percent of crude oil to BSR and holds 25 percent of the distribution market share.

When asked if the government’s request that PV Oil buy BSR and Nghi Son products will affect BSR shares, Nguyen Hoai Giang, president of BSR, said: “We don’t need PV Oil to be responsible for the outlet of our products. We can compete with our capability.” However, the request will still be implemented.

Under the Ministry of Industry and Trade‘s (MOIT) Circular 34, oil & gas and petroleum products are not goods which foreign companies can import/export and distribute. They can only join the distribution market if they invest in oil refinery projects or buy into Vietnam oil & gas companies.

Only Idemitsu Kosan and Kuwait Petroleum, the two partners in Nghi Son, have set up a joint venture – Idemitsu Q8  — which retails Nghi Son’s products in Vietnam.

JX Nippon Oil, the Japanese partner which has an 8 percent stake in Petrolimex, also indirectly was involved in the domestic distribution market.


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Kim Chi